WTI crude oil futures eased toward $69 per barrel on Thursday, trimming gains from the previous session as traders weighed the potential impact of US auto tariffs on the oil market.
Oil eases as traders weigh US auto tariff impact
The introduction of higher vehicle prices could dampen demand for crude oil, as consumers and businesses may cut back on spending, including purchases of energy-intensive goods like cars. Additionally, the tariffs could slow the transition to cleaner energy sources as manufacturers might shift focus to meeting higher vehicle costs rather than investing in more fuel-efficient or electric vehicles. Despite this, oil prices remained supported by ongoing US sanctions and tariffs, which have raised supply risks from key oil-producing countries like Iran and Venezuela.
India’s Reliance Industries will halt its Venezuelan oil imports
In a direct response to the threat of 25% US tariffs on Venezuelan oil buyers, India’s Reliance Industries, operator of the world’s largest refining complex, announced plans to halt its Venezuelan oil imports. This move is likely to further tighten supply from the Latin American country, which is already grappling with a significant decline in production due to US sanctions and internal economic instability. Meanwhile, other signs of strong demand emerged in the market, providing some support to oil prices.
US data show fall in crude stockpiles
US government data revealed that crude stockpiles fell by 3.34 million barrels last week, marking the sharpest decline since December. This drop in inventory suggests that domestic demand for oil is holding steady, which could counterbalance some of the negative effects of trade tensions on the broader economy. Additionally, gasoline inventories also dropped, indicating that consumers are still using substantial amounts of fuel, despite economic concerns. The combination of tighter supply from geopolitical risks and evidence of strong demand is likely to keep oil prices volatile in the short term.
